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A Romanian economist legally gamed the lottery
- uzerfcwn 3y agoOn a related note, Hungary's state-owned gambling company sold soccer bets in 1998 that could guarantee 25% returns. Unlike the lottery tickets in OP's story, the Hungarian arbitrage required buying only a couple of tickets and hence needed much less capital. Alas, there was no math-savvy enterpreneur to game the system, so the Hungarian gambling company made record profits. [1] [1] https://math.bme.hu/~matolcsi/szjrt8.pdf https://math.bme.hu/~matolcsi/szjrt8.pdf
- Kalpeshbhalekar 3y agoCasinos are the new lotteries! Companies will always put systems in place to protect systems but I'm sure there will always be loopholes!
- otikik 3y agoCryptocurrencies are. Why meddle with a Casino when you can swindle a bunch of guys into buying your coin and then pull the rug on your investors?
- paulryanrogers 3y agoArguably one is taking from the rich and the other is more likely taking advantage of the poor.
- devoutsalsa 3y agoWith crypto the old rich are the new poor!
- abwizz 3y agonice sentiment, but imho most coins could be bankrolled by the average billionaere
- keepamovin 3y agoThis might just be the best answer ever for that YC application question: "Tell us about a time where you hacked some system for your advantage?" Surely they would give this Romanian guy an interview based on this answer! /S
- skrebbel 3y agoIt took me a while to figure this out but I think YC are particularly looking for answers to that question that result in a win-win, ie where you hacked a system to your advantage, and to everybody else’s advantage.
- user_named 3y agoThat naivety must be of a 2012 vintage.
- sobellian 3y agoThe lottery is an explicit zero-sum game. So long as he didn't actually break the rules, I don't think YC would care. That said, the post-lottery financial maneuvers seem like a red flag.
- fakedang 3y agoI think they've removed that question now. Like to keep em entrepreneurs compliant....
- rfrey 3y agoOld YC was funding hackers as a way to compete with traditional VC. New YC is traditional VC. Hustlers yes, hackers no.
- PurpleRamen 3y agoBut did he really hacked it? Or just brutforced it?
- keepamovin 3y ago
- lordnacho 3y agoI wrote this comment the other day, about something similar: https://news.ycombinator.com/item?id=36766556#36768937 https://news.ycombinator.com/item?id=36766556#36768937 Like with trading systems, the thing that made it work here was not being smart about the maths. In fact anyone with high school maths would be able to work out when it was worth doing. The thing here was the audacity to try to put together a business around getting it done. Things like getting investors, figuring out how to print the tickets, and delivering them.
- anotherthrway 3y agoI’ve come to believe that this is a universal principle: disbelief regarding feasibility prevents actualization of vision; once one sees that it is done it is as if a mental barrier has been removed.
- RetroTechie 3y agoReminds me of a (Chinese, iirc) saying: Person saying it cannot be done, should not interrupt person doing it. In other words: believe what you will, as long as you don't get in the way of someone who's busy doing what you think is impossible.
- giovannibonetti 3y agoYeah, imagine all the people that are going to try it now, not that the path has been paved already.
- emmender1 3y agothis is so true... brilliantly put. However, even after the mental barrier is removed - Majority of us do not have the motivation to actualize our visions even after we know and believe that they are feasible. I suspect that it takes a special human emotional/energy makeup to overcome enormous obstacles in pursuit of actualizing a vision. Thats what makes entrepreneurs/hustlers special.
- lordnacho 3y ago
- downvotetruth 3y agoThis shows a date of July 21, 2023 yet https://news.ycombinator.com/item?id=17927183 https://news.ycombinator.com/item?id=17927183 from Sept 6, 2018 with 286 points to the same URL.
- primer42 3y agoThe top of the article says it's a 2018 republish
- downvotetruth 3y agoThe the lack of effort being additionally apparent with the outdated quote about the ban in the United States as lotteries are currently run by 48 jurisdictions: 45 not 44 states plus the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
- deleted 3y ago[deleted]
- tromp 3y ago> Even if Mandel were to win, there was the possibility of multiple winners — a scenario that could significantly dilute the jackpot. In fact Mandel was not able to calculate the odds of multiple winners. With publicity about an outsized jackpot, the general public is also expected to buy tickets in larger numbers, making it hard to estimate the expected winnings. For that reason, I would not consider this to be gaming, or cheating the lottery. There was no guaranteed profit, and a moderate chance of large losses. So he took a big gamble, and was lucky to be the only winner in the end. An interesting question is whether lotteries should publish the number of tickets sold when it implies expected winnings for every single ticket sold (as was the case in Mandel's lottery). On the one hand that should sell more tickets, but on the other hand it will deter some people from buying once the numbers stop being published...
- PaulHoule 3y agoBut in his case he paid himself a commission and in the case the jackpot was split I’m sure he’d still get paid even if the investors got less. It makes me think of the other lottery system where you bet numbers that are less likely than average to be bet by others so your chance of sharing the jackpot is less. Certainly there are some numbers that people over bet, and in some lotteries you could avoid some of them in principle by betting on numbers that couldn’t possibly be part of a date. The upside for the scheme is limited though because a large majority of lottery tickets are sold as ‘quick picks’ where the machine picks a random number for you which is not only easy but a sound min max strategy.
- evrydayhustling 3y agoTrue, but he followed the cardinal rule of successful traders everywhere: gamble with other peoples' money. The life insurance front sounds like a lot more work than either the algorithm or the ticket buying logistics! I wonder how much of the payouts ended up with lawyers.
- huijzer 3y ago> True, but he followed the cardinal rule of successful traders everywhere: gamble with other peoples' money. Great advice if you want to be rich and unhappy. It is better to raise money and invest it wisely.
- getarofilter 3y ago[dead]
- Liam2010 3y ago[dead]
- kulach 3y agoAm I missing something here? Are these lotteries +EV in the first place? How does the lottery expect to make money if that is the case?
- devilbunny 3y agoThey're not, generally, but if the stars align correctly, nobody will win the jackpot until it's gotten so large that buying every possible combination will - if you're the only winner - pay you more than the base odds. But then you're betting that you will have the only winning ticket. I'll usually buy a few tickets if it hits that point. Cheap fantasy.
- criddell 3y agoThe recent Powerball lottery prize was for $1 billion but there are fewer than 300,000,000 possible tickets. But like somebody else mentioned, there's always the possibility of multiple winners. For the recent billion dollar prize, a single person won. The prizes get huge because when there's no winner, the prize rolls over to the next drawing.
- mattficke 3y agoThey’re progressive jackpots, the prize pool increases until someone wins, at which point it resets. So a ticket for an individual drawing can be +EV if no one has won in a while, with the excess money coming from players in previous games rather than the lottery administrator.
- d1sxeyes 3y agoThat would be true if each combination could only be bought once. However, as you cannot know in advance how many other players will play, or what numbers they will select, you cannot properly calculate an EV. Further, lottery players rarely play randomly. A winning combination made up exclusively of numbers less than 31 has a higher chance that someone else will have the same numbers (as many people use birthdays to pick the numbers they will play).
- soneil 3y ago
- swader999 3y agoSimilar to the guy that bought a fighter jet from Pepsi but they reneged on their contract. https://en.wikipedia.org/wiki/Leonard_v._Pepsico,_Inc https://en.wikipedia.org/wiki/Leonard_v._Pepsico,_Inc.
- NoboruWataya 3y agoThey didn't renege on their contract; there was no contract.
- tialaramex 3y agoThere was no contract. The result of Leonard v Pepsico makes lots of sense read in the context of something like Carlill v Carbolic Smoke Ball Company (the classic English contract law case every student learns). In Carlill the Carbolic Smoke Ball Co. claimed it had never intended a contract to arise, that the advertisements were just "puffery" and no reasonable person should have expected (as Carlill did) that if they do what it says in the advert and yet they get Influenza anyway (Carbolic Smoke Balls were a bogus cure for flu) they can claim the £100 stated (then a considerable sum of money) like it says in the advert. The judge said well, why does the advert explain that the company has £1000 in a bank account? If there's no intention to pay people money, why did you make a bank account, put money in it and tell them about it? No, this is clearly a contract, you offered, she accepted by performance, now you need to pay the nice lady. But Pepsico clearly doesn't expect to give out fighter jets. It doesn't have any fighter jets, and the depicted scenario is ludicrous, which is exactly the opposite situation. We can see that - at least after the initial hype - John Leonard saw this as a profile opportunity more than a serious attempt to get Pepsico to give him a jet, when he's like oh, this shouldn't be a Federal trial, this should be in front of a jury of my peers, and I define "My peers" to be "The Pepsi generation" that's clearly not serious any more.
- evaneykelen 3y agoVoltaire made a fortune in more or less the same way in 1730 [1]. > This system worked best if a consortium of players bought tickets together and split the winnings, so, writes Pearson, Voltaire, de la Condamine and 11 compatriots teamed up and by June 1730, all had made a tidy sum. [1] https://www.smithsonianmag.com/smart-news/voltaire-enlightenment-philosopher-and-lottery-scammer-180967265/ https://www.smithsonianmag.com/smart-news/voltaire-enlighten...
- mlok 3y agoThank you I didn't know about this ! (And I happen to read this from Paris, right next to the Boulevard Voltaire)
- abnry 3y agoI hate lotteries and gambling in general. Take from the hopeful, give to the lucky. And the house (almost) always wins. Yes, I have some respect for those who can game the system, because I like the house losing, but their winnings are still taken from the hopeful (or worse, the naive and stupid).
- ecf 3y agoOn the other hand, I love gambling in general. Take from the stupid, tax the ever loving hell out of it, and give to the schools. I expect to lose 100% of what I go into a casino with. Those who think they can make a profit from it are profoundly stupid.
- d1sxeyes 3y agoIf you’re playing against the house yes, statistically you’re gonna lose over time. But in games where your winnings come directly from beating others rather than pure luck (poker is a popular example), you can indeed beat others based on your skill. That said, there are still a lot of factors you cannot control (like the skill of your opponents, luck of the draw) which mean your approach is absolutely the wisest. Anyone who walks into a casino with money they can’t afford to lose is setting themselves up for failure (both at the table and potentially in life).
- toss1 3y agoI've long referred to the lottery as an Innumeracy Tax. More to your point, the New York lottery long had a marketing line: "All you need is a dollar and a dream." My friend's riposte was: "We'll keep the dollar and you can keep the dream"
- ryandrake 3y ago> I hate lotteries and gambling in general. Take from the hopeful, give to the lucky. Sorry, but you've just described the underpinnings of our current winner-take-most societal-wide economic systems. Every day, more and more of our systems are rooted in luck. Being born to the right family, getting into a prestigious university, getting a good job, timing the housing market, investing in the stock market, starting a business... Everything is "take from the hopeful, give to the lucky".
- emmender1 3y agofor all of his mathematical , logistical prowess, he should have focused his attention on the bigger casino: the stock market. He would have found far easier pickings.
- hbarka 3y agoWhat a fantastic read. Incredible.
- amitport 3y agoStefan Mendel is a jew born during the Holocaust. He described how the economic state and ethnic persecution motivated him to find ways to raise the funds for getting his family out of Romania. He defines himself as Israeli-Australian that was born in Romania not as a "Romanian" as he is described in this article. A distinction that I believe is very important to him.
- maximinus_thrax 3y ago> Stefan Mendel is a jew born during the Holocaust. He was born earlier than the Holocaust (especially the holocaust in Romania). Not to dismiss your point, but it's a disctinction very important to the people born duing the Holocaust. > He described how the economic state and ethnic persecution motivated him to find ways to raise the funds for getting his family out of Romania. As a matter of fact, Jewish people were the only people able to leave communist Romania when the borders were closed. Ana Pauker, the Romanian foreign minister (herself jewish) brokered a deal with Israel to allow 4000 jews/month to emigrate to Israel. Several other rounds of exit visas given by the Romanian government to jewish people emigrating to Israel (with oil equipement and hard cash received in return) led to basically an exodus of most jews in Romania. As an anecdote, my hometown was 80% jewish when my parents were born and two years ago, the last jewish person passed away at a littler over 100 years of age. I also have jewish ancenstry.. To post some numbers, there were ~400k jews in Romania at the end of WW2 and less than ~10k when the Iron Curtain fell. A large part of (what I consider to be) Romanian culture was lost during the cummunist quest of rewriting history and creating a 'pure' nation. Just to put things into perspective. The communist rule in Romania was brutal and criminal even after the Red Army retreated and was under 100% Romanian leadership, and was especially brutal against ethnic minorities. Jewish people actually targeted during the anti-semitic Stalin purge which echoed in Romania as well, as local aparatchicks used this to purge the jews out of government (Anna Pauker is also a victim of that - not to defend her, she was also commie trash but a victim of antisemitism nontheless). I don't blame the guy for wanting out.
- denton-scratch 3y agoAccording to the article, the scheme depends on this seekrit algorithm for picking all the combinations, called "combinatorial condensation". That term links to an article in Romanian, which I can't read. But honestly, why's it supposed to be hard to list all possible combinations of 6 of the first 50 integers? Isn't that the same as listing all 6-digit integers in base 50? [Edit] ...Yeah, you also have to filter-out all those integers with repeated digits, but that hardly needs a super-seekrit algorithm.
- danielovichdk 3y agoMovie this